Chapter 13 Monopolistic Competition
Which of the following types of firms use the marginal revenue equals marginal cost approach to maximize profits?
Both perfectly competitive and monopolistically competitive
What trade-offs do consumers face when buying a product from a monopolistically competitive firm?
Consumers pay a price greater than marginal cost but also have a wider array of choices
Which of these statements is correct? -brand names can be easily protected, especially as time goes by -establishing franchises is harmful to a firm's long-term success -legally enforcing trademarks can be difficult
Legally enforcing trademarks can be difficult
Which of the following best describes the additional revenue associated with selling an additional unit of output?
Marginal revenue
What is the term given to all the activities necessary for a firm to sell a product to a consumer?
Marketing
Which type of efficiency is achieved by a monopolistically competitive firm in the long run?
Neither allocative nor productive efficiency
For what type of market structure is the demand curve the same as marginal revenue?
Perfect competition
Which of the following best describes how the product differentiation of monopolistically competitive firms may benefit consumers?
Product differentiation can locate firms more conveniently to consumers and offer versions of a product or service that better fits their needs.
Any actions the firm takes to maintain product differentiation over time is known as:
brand management
The monopolistically competitive firm sells a ___________ product and faces a ____________ demand curve.
differentiated, downward-sloping
A monopolistically competitive firm in a long run equilibrium produces where:
its demand curve is tangent to its average total cost curve
A monopolistically competitive firm is characterized by the existence of many firms in the market, differentiated products and:
low barriers to entry
A monopolistically competitive firm produces where:
marginal revenue equals marginal cost
If a monopolistically competitive firm's demand curve is above its average total cost curve, then this firm is making:
positive economic profit
A firm may opt to pay millions of dollars for celebrity endorsements in order to:
signal to consumers that the advertised product is appealing and likely to be popular
Monopolistically competitive firms have some control over price because:
the products they produce are differentiated